Hemming Co. reported the following current-year purchases and sales for its only product. Date Activities Units Acquired at Cost
Units Sold at Retail Jan. 1 Beginning inventory 200 units @ $10 = $ 2,000 Jan. 10 Sales 150 units @ $40 Mar. 14 Purchase 350 units @ $15 = 5,250 Mar. 15 Sales 300 units @ $40 July 30 Purchase 450 units @ $20 = 9,000 Oct. 5 Sales 430 units @ $40 Oct. 26 Purchase 100 units @ $25 = 2,500 Totals 1,100 units $ 18,750 880 units Required: Hemming uses a periodic inventory system. (a) Determine the costs assigned to ending inventory and to cost of goods sold using FIFO. (b) Determine the costs assigned to ending inventory and to cost of goods sold using LIFO. (c) Compute the gross margin for each method.
The total goods available for sale for the period is computed as follows: Inventory, beg (200 @ $10) ----------------------------------------$2,000 1st Purchase (350 @ $15) ---------------------------------------------5,250 2nd Purchase (450 @ $20) ------------------------------------------9,000 3rd Purchase (100 @ $25) -------------------------------------------2,500 Total Goods Available for Sale -----------------------------------$18,750
(a) In computing the Ending Inventory and Cost of Goods Sold using FIFO method: Total Goods Available for Sale ---------------------------------- $18,750 Less: Ending Inventory* -------------------------------------------- 4,900 Cost of Goods Sold --------------------------------------------------$13,850
*Ending Inventory Inventory, beg ---------------------------------------------------------- 200 Total Purchases -------------------------------------------------------- 900 Total Available Units ------------------------------------------------- 1,100 Less: Units Sold ------------------------------------------------------- 880 Inventory, end --------------------------------------------------------- 220 Cost of Ending Inventory 100 × $25 = $2,500 120 × $20 = 2,400 220 $4,900
(b) In computing the Ending Inventory and Cost of Goods Sold using LIFO method: Total Goods Available for Sale ---------------------------------- $18,750 Less: Ending Inventory* -------------------------------------------- 2,300 Cost of Goods Sold --------------------------------------------------$16,450
*Ending Inventory Inventory, beg ---------------------------------------------------------- 200 Total Purchases -------------------------------------------------------- 900 Total Available Units ------------------------------------------------- 1,100 Less: Units Sold ------------------------------------------------------- 880 Inventory, end --------------------------------------------------------- 220 Cost of Ending Inventory 100 × $20 = $2,000 120 × $15 = 300 220 $2,300
(c) The Gross Margin for FIFO and LIFO FIFO LIFO Sales (880 @ $40) ------------------------$35,200 -------------------$35,200 Cost of Goods Sold ---------------------- 13,850 -------------------- 16,450 Gross Margin --------------------------------$21,350 ------------------- $18,750
<span>This is because the tax on a carton of cigarette is about $10plus. It used to be $3plus before the Obama administration and when the cost of tax is added to the sales price, it makes it more expensive for the average consumer, however, black market sellers usually avoid paying taxes thats why it is black market.</span>
A channel of distribution is a means used to get a product from the producer or manufacturer to the consumer. Channels of distribution include wholesalers, retailers, distributors etc.
Some business sales can get influenced heavily by season, like how swimsuit sell in summer but not in winter. This influence is called a seasonal factor. The sales of the product have to be adjusted to seasonal factor to show a result that more accurately represent the sales. There are 12 months and the sum of the adjusted factor is 12.18, so the adjusted ted factor for every month will be: 12.18/12 = 1.015.
The adjusted seasonal factor for April will be: 1.1/1.015= 1.0837
